Typically, individual members are expected to invest a minimum of $10,000 per year; this can be spread across one deal or several. SCA can help decipher the nature of the deal and the syndication structure. Maximum Investment: There’s no set maximum. Members can invest as much as they are comfortable with, given the deal terms and their own personal financial considerations.
Investments are primarily made in the form of Convertible Notes, SAFE (Simple Agreement for Future Equity), or a Priced Round. Terms vary by deal, but common terms include valuation cap, discount rate (for convertible notes), equity percentage, and terms related to investor protections like pro-rata rights, liquidation preferences, and anti-dilution provisions.
While SCA has a broad interest across sectors, our primary focus is on emerging regional industries and technology-driven startups, especially those in software, healthcare, fintech, and clean energy. However, any innovative company with a compelling value proposition may be considered.
Due diligence is a critical step in our investment process. Prior to pitching, startups are screened by experts who review their business model, financial projections, market potential, competitive landscape, team background, and any potential legal or regulatory concerns. After an initial pitch, if there’s member interest, SCA will identify a lead angel to assist with investment terms.
As a new investor, you’ll receive guidance throughout the process. Expect to review detailed pitch materials, participate in Q&A sessions with entrepreneurs, and receive due diligence reports. Post-investment, you’ll typically receive periodic updates from the company on financials, key milestones, and any significant challenges or opportunities.
Returns on angel investments can vary widely. Some investments may see a return within a few years, while others may take 7-10 years, especially if the company goes through multiple funding rounds. It’s also essential to understand that angel investing is high-risk, and there’s no guarantee of a return.
The tax implications can vary based on the type of investment, the duration of the hold, and individual tax situations. In the U.S., for instance, Qualified Small Business Stock (QSBS) can have significant tax advantages. Also, losses on startup investments can often be written off against other capital gains.
SCA provides startups with mentorship, strategic advice, introductions to industry experts, and access to potential customers and partners through our network. We may also facilitate introductions to later-stage investors for subsequent funding rounds. Our goal is to be an active partner in the growth and success of our portfolio companies.